Exam 6: Merchandise Inventory

Assuming that costs are changing during the accounting period,under the last-in,first-out inventory costing method,the amount of cost of goods sold calculated using the perpetual inventory system will usually differ from the amount calculated using the periodic.inventory system.

Which of the following assets must be reported at the lower-of-cost-or-market value?

The periodic inventory records of Lucas Dental Supply indicate the following for the month of April: As of April 30,Lucas counts 8 units of merchandise inventory on hand. Compute ending merchandise inventory and cost of goods sold for Lucas using the FIFO inventory method.

Properly recording inventory when sold and removing the units sold from the inventory count will prevent a company from running out of inventory.

Blanchard,Inc.provided the following for 2017: Calculate the company's inventory turnover ratio for the year.(Round your answer to two decimal places. )

Under which of the following inventory costing methods is the ending inventory based on the costs of the most recent purchases?

Using the FIFO method of inventory valuation will always produce the same results whether a company uses perpetual or periodic inventory costing methods.

A company is uncertain whether a complex transaction should result in an asset being recorded at $100,000 or at $150,000.Under the conservatism principle,it should choose to show it at $100,000.

Under the weighted-average method for inventory costing,the cost per unit is determined by ________.

A company should not change the inventory costing method each period in order to maximize net income.This is an example of the disclosure principle.

When using the specific identification inventory costing method,ending inventory amounts depend on which costs are assigned to the inventory sold.

The lower-of-cost-or-market rule demonstrates accounting conservatism in action.

Which of the following values is considered the market value when valuing inventory at lower-of-cost-or-market?

An overstatement of ending merchandise inventory in the current period results in an understatement of cost of goods sold in the current period.

Which of the following principles states that a business should not report anticipated gains?

A company that uses the periodic inventory provides the following information: 1.Beginning Inventory $11,000 2.Net Purchases $95,000 At the end of the period,the company does an inventory count and finds $10,000 of inventory on hand. What is the amount of cost of goods sold?

A company purchased 100 units for $30 each on January 31.It purchased 95 units for $40 each on February 28.It sold 150 units for $55 each from March 1 through December 31.If the company uses the last-in,first-out inventory costing method,what is the amount of Cost of Goods Sold on the income statement for the year ending December 31? (Assume that the company uses a perpetual inventory system. )

A company discovers that its cost of goods sold is understated by an insignificant amount.It does not need to correct the error because of the conservatism principle.

List and briefly discuss three measures that can be taken to maintain good controls over merchandise inventory.

An overstatement of ending merchandise inventory in the current period results in an understatement of net income in the current period.